Homework Answers
Option 4
In excel when we use Rate function and put the above parameters we get error. This is because PV should be a negative number.
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D Question 12 6.25 pts Compute Interest Rate $680 $1,000 $50 2 PV FV PMT Years...
a. Find the FV of $1,000 invested to earn 10% annually 5 years from now. Answer...
a. Find the FV of $1,000 invested to earn 10% annually 5 years from now. Answer this question by using a math formula and also by using the Excel function wizard. Inputs: PV = 1000 I/YR = 10% N = 5 Formula: FV = PV(1+I)^N = Wizard (FV): $1,610.51 Note: When you use the wizard and fill in the menu items, the result is the formula you see on the formula line if you click on cell E12. Put the...
Problem 5-41 a. Find the FV of $1,000 invested to eam 10% after 5 years. Answer...
Problem 5-41 a. Find the FV of $1,000 invested to eam 10% after 5 years. Answer this question by using a math formula and also by using the Excel function wizard. Now create a table that shows the FV at 0%, 5%, and 20% for 0, 1, 2, 3, 4, and 5 years. Then create a graph with years on the horizontal axis and FV on the vertical axis to display your results. c. Find the PV of $1,000 due...
Q1 - Describe N,I/Y,PV,PMT, and FV. Q2 – Why is there one negative sign among the...
Q1 - Describe N,I/Y,PV,PMT, and FV. Q2 – Why is there one negative sign among the last three listed in Q1? Q3 – What is the difference between compounding and discounting? Q4 – What is an annuity? What are the different types of annuities? When are payments made? Q5 – What is a perpetuity? What is the relationship between PV and Interest? Q6 – Does FV get larger or smaller based off monthly compounding compared to quarterly compounding? Q7 –...
If $1,000 were invested now at a 12% interest rate compounded annually, what would be the...
If $1,000 were invested now at a 12% interest rate compounded
annually, what would be the value of the investment in two
years
D 30. Your current bank is paying 6.25% simple interest rate. You can move your savings account to Harris Bank that pays 6.25% compounded annually or to First Chicago bank paying 6% compounded semi-annually. To maximize your return you would choose: First Chicago bank Harris Bank your current bank you are indifferent, because the effective interest rate...
A $1,000 par value bond was issued 25 years ago at a 12 percent coupon rate....
A $1,000 par value bond was issued 25 years ago at a 12 percent coupon rate. It currently has 15 years remaining to maturity. Interest rates on similar obligations are now 8 percent. Assume Ms. Bright bought the bond three years ago when it had a price of $1,050. Further assume Ms. Bright paid 30 percent of the purchase price in cash and borrowed the rest (known as buying on margin). She used the interest payments from the bond to...
D | Question 2 6.25 pts You purchase an annuity investment that pays you a lump...
D | Question 2 6.25 pts You purchase an annuity investment that pays you a lump sum amount of $8,359 at the end of the term. You must make $1,000 quarterly payments until the end of the term. How many of these quarterly payments must you make if the investment earns a 5% interest rate? O 12 O 2 O 10
A $1,000 par value bond was issued 25 years ago at a 12 percent coupon rate....
A $1,000 par value bond was issued 25 years ago at a 12 percent coupon rate. It currently has 25 years remaining to maturity. Interest rates on similar obligations are now 8 percent. Assume Ms. Bright bought the bond three years ago when it had a price of $1,015. Further assume Ms. Bright paid 40 percent of the purchase price in cash and borrowed the rest (known as buying on margin). She used the interest payments from the bond to...
5. What is the interest rate if Fif = 1,000, PV 600, and t 50 periods?...
5. What is the interest rate if Fif = 1,000, PV 600, and t 50 periods? 6. What is the annual rate (APR) if compounding is monthly, and the interest rate is 4% 7. Let there be two compounding periods per year. Let the APR be 10%. What is the EAR'? 8. What is EAR if APR 6% and compounding is monthly? 9. Consider an annuity. What is the payment amount per month if PVA = 6%, and for five...
Time Value of Money Spreadsheet Example 4 Module IV Name: Date: 6 7 8 Question 1 9 Question 2 10 Question 3 11 Question...
Time Value of Money Spreadsheet Example 4 Module IV Name: Date: 6 7 8 Question 1 9 Question 2 10 Question 3 11 Question 4 12 Question 5 13 Question 6 14 Question 7 15 Question 8 16 Question 9 17 Question 10 18 19 20 Single Amount or Annuity 21 Periodic Interest Rate 22 Number of Periods 23 24 25 Present Value of Single Amount 26 27 Future Value of Single Amount 28 29 Future Value of An Annuity...
I need help on question 2. MODULE IV: TIME VALUE OF MONEY INTRODUCTION The time value...
I need help on question 2.
MODULE IV: TIME VALUE OF MONEY INTRODUCTION The time value of money analysis has many a lysis has many applications, ranging from setting hedules for paying off loans to decisions about whether to invest in a partie financial instrument. First, let's define the following notations: I = the interest rate per period Na the total number of payment periods in an annuity PMT = the annuity payment made each period PV = present value...
Problem 5-41 a. Find the FV of $1,000 invested to eam 10% after 5 years. Answer this question by using a math formula and also by using the Excel function wizard. Now create a table that shows the FV at 0%, 5%, and 20% for 0, 1, 2, 3, 4, and 5 years. Then create a graph with years on the horizontal axis and FV on the vertical axis to display your results. c. Find the PV of $1,000 due...
If $1,000 were invested now at a 12% interest rate compounded
annually, what would be the value of the investment in two
years
D 30. Your current bank is paying 6.25% simple interest rate. You can move your savings account to Harris Bank that pays 6.25% compounded annually or to First Chicago bank paying 6% compounded semi-annually. To maximize your return you would choose: First Chicago bank Harris Bank your current bank you are indifferent, because the effective interest rate...
A $1,000 par value bond was issued 25 years ago at a 12 percent coupon rate. It currently has 15 years remaining to maturity. Interest rates on similar obligations are now 8 percent. Assume Ms. Bright bought the bond three years ago when it had a price of $1,050. Further assume Ms. Bright paid 30 percent of the purchase price in cash and borrowed the rest (known as buying on margin). She used the interest payments from the bond to...
D | Question 2 6.25 pts You purchase an annuity investment that pays you a lump sum amount of $8,359 at the end of the term. You must make $1,000 quarterly payments until the end of the term. How many of these quarterly payments must you make if the investment earns a 5% interest rate? O 12 O 2 O 10
A $1,000 par value bond was issued 25 years ago at a 12 percent coupon rate. It currently has 25 years remaining to maturity. Interest rates on similar obligations are now 8 percent. Assume Ms. Bright bought the bond three years ago when it had a price of $1,015. Further assume Ms. Bright paid 40 percent of the purchase price in cash and borrowed the rest (known as buying on margin). She used the interest payments from the bond to...
5. What is the interest rate if Fif = 1,000, PV 600, and t 50 periods? 6. What is the annual rate (APR) if compounding is monthly, and the interest rate is 4% 7. Let there be two compounding periods per year. Let the APR be 10%. What is the EAR'? 8. What is EAR if APR 6% and compounding is monthly? 9. Consider an annuity. What is the payment amount per month if PVA = 6%, and for five...
Time Value of Money Spreadsheet Example 4 Module IV Name: Date: 6 7 8 Question 1 9 Question 2 10 Question 3 11 Question 4 12 Question 5 13 Question 6 14 Question 7 15 Question 8 16 Question 9 17 Question 10 18 19 20 Single Amount or Annuity 21 Periodic Interest Rate 22 Number of Periods 23 24 25 Present Value of Single Amount 26 27 Future Value of Single Amount 28 29 Future Value of An Annuity...
I need help on question 2.
MODULE IV: TIME VALUE OF MONEY INTRODUCTION The time value of money analysis has many a lysis has many applications, ranging from setting hedules for paying off loans to decisions about whether to invest in a partie financial instrument. First, let's define the following notations: I = the interest rate per period Na the total number of payment periods in an annuity PMT = the annuity payment made each period PV = present value...
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